IMPLEMENTED BY GAZ-SYSTEM S.A.

Transcription

1 PROJECTS OF DEVELOPMENT COMMON INTEREST PLAN IMPLEMENTED BY GAZ-SYSTEM S.A. for satisfying the current and future transmission demand for natural gas for Driving the development of gas transmission infrastructure ETRACT T H E S Y S T E M T H A T C O N N E C T S

2 INTRODUCTION Dear Sirs, We are pleased to present to you the Extract from the Development Plan of the Gas Transmission Operator GAZ-SYSTEM S.A. for satisfying the current and future demand for natural gas , which was agreed by the President of the Energy Regulatory Office on 4 April GAZ-SYSTEM S.A. has developed a Ten-Year Development Plan in accordance with the provisions of the Energy Law, namely in consultation with the National Regulatory Authority. Having worked with the users of the transmission system, both current as well as potential, we posted the Extract from the Development Plan for in GAZ-SYSTEM S.A. s website, so that market players can have a clear picture of the company s development plans. The document takes into account the results of the consultations held with transmission system users in July 2013 and reflects the market demand for new transmission infrastructure. We carefully reviewed the market s expectations, as well as proposals and development plans of companies conducting business activities on the Polish market. At this point, I would like to thank all parties involved for their active participation in the process of planning the development of the transmission system in Poland. GAZ-SYSTEM S.A. s Development Plan for contains the planned investment activities, as a result of which the national transmission system will be fully functional and integrated with the neighbouring gas transmission systems of the EU Member States. It assumes that approximately 2,000 km of gas pipelines will be built by This will create favorable conditions for the long-term development and operation of companies using the gas transmission system and will ensure a competitive gas market in Poland. Rafał Wittmann Development Division Director 2

3 TABLE OF CONTENTS 1. INTRODUCTION EISTING TRANSMISSION SYSTEM TRANSMISSION SYSTEM DEVELOPMENT CONDITIONS FORCASTED DEMAND FOR THE TRANSMISSION SERVICE DEVELOPMENT OF THE TRANSMISSION SYSTEM EPANSION OF THE TRANSMISSION SYSTEM...12 INVESTMENTS CONTINUED IN INVESTMENTS PLANNED FOR RESULTS OF THE IMPLEMENTATION OF THE DEVELOPMENT PLAN LIST OF SELECTED INVESTMENTS IN THE DEVELOPMENT PLAN

4 1. INTRODUCTION Gas Transmission Operator GAZ-SYSTEM S.A., appointed by a decision of the President of the Energy Regulatory Office (President of ERO) of 13 October 2010, GAZ-SYSTEM S.A. as the gas transmission system operator, manages the national transmission network and maintains continuous and reliable transmission of gas between sources and customers in Poland. In performing its fundamental obligations arising from the Energy Law, GAZ-SYSTEM S.A. is responsible, inter alia, for the security of the supply of natural gas by ensuring the safety of the operation of the gas system and the performance of agreements with its users, as well as effective operation of the network while ensuring the required gas quality and supply reliability. The obligation to guarantee the development of the transmission system in order to ensure the long-term capacity of the gas system to satisfy justified needs regarding the transmission of natural gas in national and cross-border trade through the expansion of the gas system and, where applicable, the expansion of interconnections with other gas systems is also a particularly important responsibility. The development of the transmission system is planned on the basis of the directions, objectives and activities in the area of the energy policy defined in the Energy Policy for Poland 2030 (a document adopted by the Council of Ministers on 10 November 2009), the Energy Law, European legislation, as well as taking into account the strategic directions of functioning and development of GAZ-SYSTEM S.A. An important role in planning development is played by market information, which indicates the outlook for future growth in demand for the transmission service and by the expressed expectations of system users regarding the functionality of the system and the preferred directions of its interconnections with neighbouring countries. The formal obligation to prepare the Development Plan arises from Article 16 of the Energy Law of 10 April 1997 (Journal of Laws of 2012, item 1059, as amended), according to which energy companies involved in the transmission of natural gas prepare development plans for satisfying current and future demand for natural gas. In accordance with Article 16, sec. 6 of the Energy Law Act, draft plans are subject to agreement with the President of the Energy Regulatory Office. The obligation to prepare Development Plans over a ten-year period arises from the provisions of the acts of law contained within the III Energy Package, which have been in force since 3 March In fulfilling its responsibilities of a transmission system operator, GAZ-SYSTEM S.A. has presented a 10-year Development Plan to the President of ERO for satisfying current and future demand for natural gas for (Development Plan for ). In a letter of 4 April 2014, the President of the Energy Regulatory Office acknowledged that the presented draft of the Development Plan has been agreed to the extent encompassing The Development Plan for contains a summary presentation of the investment projects in the transmission system planned for implementation or initiation up to 2023, broken down into tasks planned for implementation or initiation over two time perspectives: 2018 perspective related to the preparation and implementation of the most important investment tasks within the framework of the so-called North-South Corridor intended to ensure conditions for the construction of a regionally integrated gas market in the countries of Central and Eastern Europe 2023 perspective the completion of the modernisation of the national transmission system in the eastern part of Poland and providing for the integration of the gas market of the Baltic States with the market of the Central and Eastern European countries. 4

5 2. EISTING TRANSMISSION SYSTEM The transmission system consists of two natural gas subsystems: High-methane natural gas (E) Low-methane natural gas (Lw) The transmission system managed by GAZ-SYSTEM S.A. is supplied with gas from the following Entry Points: Figure 1. National Transmission System Entry points related to gas imports: Eastern border: Drozdowicze Polish-Ukrainian border Wysokoje Polish-Belarussian border Western border: Lasów Polish-German border Southern border: Cieszyn Polish-Czech border Transit Gas Pipeline System (SGT): Tietierowka Włocławek Lwówek Entry points: Włocławek and Lwówek. Grodzisk Local interconnections for local imports: Gubin Polish-German border Wysokoje Odolanów Lasów Lwówek Branice Polish-Czech border Tietierowka Włocławek Grodzisk Głuchołazy Polish-Czech border Wysokoje Tietierowka Polish-Belarussian border Entry points related to national deposits: in the high-methane natural gas system in the low-methane natural gas systems Odolanów Denitrogenation Plant Grodzisk Denitrogenation Plant Entry points related to six Underground Gas Stores, which are entry points into the system during trading Lasów Odolanów Drozdowicze E GAS SYSTEM Lw GAS SYSTEM SYSTEM OF TRANSIT GAS PIPELINES Drozdowicze E GAS SYSTEM Lw GAS SYSTEM SYSTEM OF TRANSIT GAS PIPELINES The high-methane natural gas system constitutes a trunk system encompassing: Figure 2. Main E-gas trunk lines an eastern trunk line on the Jarosław Wronów Rembelszczyzna route a southern trunk line on the Jarosław Pogórska Wola Tworzeń Odolanów route a system of supply of Central Poland on the Hołowczyce Rembelszczyzna Gustorzyn Odolanów route a system of supply of northern Poland on the Gustorzyn Gdańsk route ENTRY POINTS OF IMPORTED GAS INTO THE SYSTEM MAIN DIRECTIONS OF DELIVERY OF IMPORTED GAS a system of supply of north-western Poland on the Odolanów Lwówek Police route the supply of Lower Silesia from Lasów MAIN TRANSMISSION TRUNK LINES ENTRY POINTS OF IMPORTED GAS INTO THE SYSTEM MAIN DIRECTIONS OF DELIVERY OF IMPORTED GAS MAIN TRANSMISSION TRUNK LINES 5

6 The low-methane natural gas transmission system covers parts of western Poland in 3 voivodships: Lubuskie, Greater Poland and Lower Silesia. It is supplied with gas from the field located in the Polish Lowlands by the following gas mines: Kościan-Brońsko, Bonikowo, Białcz, Radlin, Zaniemyśl (Mchy) and Roszków. Because of the large differences in the composition of the gas in the individual mines, low-methane natural gas is stabilized through the Tietierowka addition of methane gas at the Krobia and Grodzisk Włocławek gaslwówek mixing plants. Grodzisk Figure 3. Lw gas system Tietierowka Wysokoje UndergroundWłocławek gas storages interoperate with the Lwówek transmission gas system, playing an exceptionally Wysokoje Grodzisk important role Odolanów of regulator covering the non-uniformity Lasów of the demand for gas. Odolanów Lasów The Storage System Operator (SSO) Drozdowicze is responsible for the safety of functioning and operation of the underground E-gas storages, having the following E GAS SYSTEM underground gas storage facilities Drozdowicze (UGS): E GAS SYSTEM Lw GAS SYSTEM Lw GAS SYSTEM SYSTEM OF TRANSIT GAS PIPELINES SYSTEM OF TRANSIT GAS PIPELINES UGS Wierzchowice (depleted deposit); E GAS SYSTEM Lw GAS SYSTEM UGS Strachocina (depleted deposit); SYSTEM OF TRANSIT GAS PIPELINES UGS Husów (depleted deposit); UGS Swarzów (depleted deposit); UGS Brzeźnica (depleted deposit); CUGS Mogilno (salt caverns); CUGS Kosakowo (salt caverns). E GAS SYSTEM Lw GAS SYSTEM SYSTEM OF TRANSIT GAS PIPELINES Figure 4. Location of underground gas storages UGS Daszewo 30 mcm UGS Daszewo 30 mcm CUGS Kosakowo 100/250 mcm CUGS Kosakowo 100/250 mcm CUGS Mogilno 412/842 mcm The transmission system operated by GAZ-SYSTEM S.A. encompasses the high pressure gas network with the following elements: UGS Bonikowo 200 mcm CUGS Mogilno 412/842 mcm UGS Bonikowo 200 mcm gas pipelines with valve station, connection units, compressor connection units; compressor stations; system nodes; gas stations with in-built equipment for reducing, ENTRY POINTS OF IMPORTED GAS INTO THE SYSTEM regulating and metering natural gas. UGS Wierzchowice 575/1200 mcm UGS Brzeźnica 65/100 mcm UGS Wierzchowice 575/1200 mcm UGS Swarzów 90UGS mcmbrzeźnica 65/100 mcm UGS Swarzów EISTING UGS 90 mcm INVESTMENTS PLANNED BY 2015 MAIN DIRECTIONS OF DELIVERY OF IMPORTED GAS ENTRY POINTS OF IMPORTED GAS INTO THE SYSTEM EISTING UGS 100/250 UGS capacitycapacity INVESTMENTS PLANNEDcurrent BY 2015/ planned MAIN DIRECTIONS OF DELIVERY OF IMPORTED GAS INVESTMENTS PLANNED BY 2020 MAIN TRANSMISSION TRUNK LINES UGS Husów 350/500 mcm UGS Strachocina 330 mcm UGS Husów 350/500 mcm UGS Strachocina 330 mcm INVESTMENTS PLANNED BY 2020 MAIN TRANSMISSION TRUNK LINES 100/250 UGS capacitycapacity current / planned Table 1. Technical characteristics of the transmission system No. 1 Element of the transmission system Unit Total 1. Gas transmission pipeline km System nodes units Gas stations units Compressor stations units

7 3. TRANSMISSION SYSTEM DEVELOPMENT CONDITIONS The Development Plan for assumes that investment activities will be conducted in the transmission system up to 2023, which assure the achievement of the objectives specified in the Energy Policy for Poland until 2030 in order to increase energy security of the country, liberalise the Polish gas market, improve competition and assure conditions of intensive development of the national economy and the companies conducting activities in it. It should simultaneously be emphasized that the Development Plan for should ensure the achievement of these strategic objectives to the maximum possible extent, with optimal outlay on development and costs of operation of the transmission system. A number of measures proposed in the agreed Development Plan are still at the planning and preparation stage, while the investment decisions will be made at a later date, together with the materialisation of the assumptions made as to the directions of development of the key sectors of the economy and the possibilities of implementing the proposed investment intentions. The development of the gas infrastructure in Poland will mainly be determined by the following factors: the level of the forecasted demand for gas and the demand for the transmission service; the level of supply of gas from national sources, including unconventional deposits; the ability to balance demand with imported gas; the preferred directions of imports of gas, as well as possible exports and a transit; safety of transmission in functional and technical terms; the progressing process of integration of the markets of the European Union; the development of market mechanisms in the gas sector. Figure 5. Transmission system development conditions Demand for the transmission service Power generation Industry Municipal-domestic / trade / services Export / transit transmission Domestic sources Conventional sources Unconventional sources Market solutions Cooperation platforms Harmonization of principles EU Network Codes Increase in competition Impact on natural gas prices Target model of the Visegrad 4 (V4) Gas Market (V4 GTM) Smart Grid Infrastructure development, a condition for market development Import / export needs Optimization of assets Expansion of interconnections Expansion of gas transit system interconnections Market integration Infrastructure: BEMIP, N-S corridor Increase in the attractiveness of the markets for large diversification projects Transmission security EU Regulation 994/2010 on security of gas supply Diversification Expansion of interconnection points 7

8 4. FORECASTED DEMAND FOR THE TRANSMISSION SERVICE A forecast of demand for the transmission service for has been developed for the purposes of preparing the Development Plan. Two variants of the forecast have been prepared: the Moderate Growth Variant and the Optimal Development Variant. The main factors with the greatest impact on the demand for gas transmission in will be: The generation of electricity and heat from natural gas; GDP growth; The price of gas. Table 2. Schedule of significance of factors affecting the forecast for the defined variants. Variant of the forecast Generation of electricity and heat Moderate Growth Increase in the level of signed agreements and commenced investments Optimal Development Increase in the level of signed agreements and the most realistic investments from the connection conditions issued GDP Low growth, possible recession Moderate growth, no recession The price of gas High growth because of the high demand in the EU (import from Russia) Moderate growth related to greater access to the common market of the EU Changes in the electricity market will have the greatest impact on the future demand for gas and the rate of changes in the amount of gas transmitted. Other factors are of lesser importance to the results of the forecast (at a level of no more than a dozen or so percent), although, they should be considered jointly, because they are interrelated. The individual forecasts are reflected in the preparatory work observed on the market regarding the construction of new power generation capacity. Some projects are in the implementation phase, some are at the stage before taking the investment decision, while others are still at an early planning stage. A large number of these new power generation units are being considered to be powered by natural gas. GAZ-SYSTEM S.A. has signed or is in the process of signing transmission network connection agreements, which, in the case of implementation, may result in a significant increase in annual demand for gas. According to GAZ-SYSTEM S.A., not all of them will reach the implementation stage, or at least not in the near time perspective, which is evidenced by the fact that the majority of them are conditional agreements, while some have already been terminated because of a lack of investment decision on the investor s side. Therefore, it was necessary to conduct analysis, on the basis of which the two variants of the forecast were prepared. I. The Moderate Growth Variant was determined on the basis of nominations from transmission contracts (treated as a static base for remaining variants), increased by the amounts specified in signed transmission network connection agreements for the commenced investments for the construction of new CCGT units at Stalowa Wola and Włocławek power plants. At present, this is the variant of forecasts which is treated as realistic. II. The Optimal Development Variant was prepared after analysing the possibilities and probability of demand arising from quantities declared by specific customers. As a follow-up of resulting analysis: for several exisiting gas customers, the forecasted amounts were reduced to the level of nominations specified in the transmission contract; a group of potential customers were exluded, for instance, in the case of notifications at one point by several customers of the same profile of businesses; only those potential customers who have concluded connection agreements with the electricity TSO - Polskie Sieci Elektroenergetyczne S.A. (PSE S.A.) and have started to choose contractors for their investments were included. 8

9 DN DN DN 800 DN 800 The Optimal Development Variant can be considered possible, because each of the qualifi ed facilities can shortly Diameter (mm) move into DN the 700 implementation phase in the event of a change in the economic DN 700climate for natural gas. The area of growth in the forecast of domestic demand between the Moderate Growth Variant and the Optimal DN DN 500 Development Variant is taken into consideration in the planning of the development of the transmission system. <DN 500 Chart 1. Comparison of forecasts annual demand for the transmission service (arising from domestic demand) Length (km) Diameter (mm) <DN Length (km) bcm FORECAST OF OPTIMAL DEVELOPMENT VARIANT FORECAST OF MODERATE GROWTH VARIANT FORECAST FROM THE ENERGY POLICY TO 2030 The forecast 2 of 000domestic demand is not the sole determinant in the planning of the level of demand for the transmission 1 service, 800 in which consideration still needs to be given to the possible need for gas transit and exports, which will support the development of interconnections with the neighbouring countries. Interest has been increasing 1 400recently in the provision of such services by GAZ-SYSTEM S.A., especially in the direction of Ukraine. It is currently diffi cult to prejudge how long this interest will remain and what amounts may be ultimately transmitted. 1 The 000 necessary analytical work will be conducted in this area, while the results will be included in the update 800 of the Development Plan. Furthermore, potential interest in the transmission of gas to Lithuania, as well as to 600 the Czech Republic and Slovakia, should be expected, which was included in the currently proposed scope 400of expansion of the infrastructure. 200 The Development 0 Plan for assumes the expansion of the internal transmission system and the construction of new interconnections with the neighbouring countries. The President of the Energy Regulatory MEASURES IMPLEMENTED BY 2014 Offi ce deemed justifi ed the capital expenditures (CAPE) until 2018 at the amount of PLN 7.1 billion. MEASURES IMPLEMENTED BY 2018 MEASURES IMPLEMENTED BY

10 5. DEVELOPMENT OF THE TRANSMISSION SYSTEM The expansion of the transmission system is a long-term and difficult process to implement. Furthermore, the planned parameters of the infrastructure should also take account of the operational reserve capacity. It should simultaneously be remembered that the infrastructure which is built will operate for several decades, while the forecasts of demand for the transmission service are subject to natural uncertainty related to the volatility of factors determining that gas is an attractive fuel for the economy, in particular for the power generation industry. In achieving the strategic objectives which are set, GAZ-SYSTEM S.A. is required to integrate the national transmission system with the European trunk lines and to create technical conditions in the transmission system enabling the transit and export of gas. The investment scenario used in the agreed Development Plan for the Real Implementation Scenario, takes into account the possibility of new export needs appearing (at a level which is close to the Optimum Development forecast) and the need to cover them with import entries. The selected Real Implementation Scenario is highly flexible, enabling market needs to be satisfied. If investment decisions are made by investors from the electricity sector to build further units powered by natural gas, the expanded system will have appropriate spare capacity. It can be used for both the needs of the electricity sector (if the investment decisions referred to above are made) and for potential export contracts or in the appropriate proportions for both the above needs. New interconnections: a) Czech Republic Poland interconnection upgrade (Stork II) and related internal reinforcements in Western Poland (perspective of the Plan 2018): The project involves the construction of a new interconnection between the Polish and Czech systems with a capacity of approx. 6.5 bcm/y within the framework of the North-South Corridor. The project is at the stage of preliminary preparatory work conducted jointly with the operator of the Czech transmission system. b) Slovakia Poland interconnection and related internal reinforcements in Eastern Poland (perspective of the Plan 2023): The project involves the construction of an interconnection between the Polish and Slovakian systems with a capacity of approx. 5.7 bcm/y within the framework of the North-South Corridor. The project is at the stage of preliminary preparatory work conducted jointly with the operator of the Slovakian transmission system. c) Continuation of efforts towards increasing the capacities of gas import from Germany (perspective of the Plan 2018): Depending on the market conditions, the provision of larger capacities that currently being prepared may be expected between the German market areas Gaspool/NCG and the domestic market area. This will be possible by increasing the capacity of existing interconnections or building new interconnetion points. The work in this area is at an early stage of analysis. Based on the current assessment, the need to increase capacity may even arise before 2018, but this will be confirmed earlier through market consultations. d) Poland - Lithuania interconnection (perspective of the Plan 2023): The project involves the construction of a new interconnection between the Polish and Lithuanian systems with a capacity of approx. 2.4 bcm/y. The project is at the stage of preliminary preparatory work conducted jointly with the operator of the Lithuanian transmission system. 10

11 e) Capacity extension of Świnoujście LNG terminal in Poland (perspective of the Plan ): In accordance with the preliminary objectives of the project, the terminal s re-gasifi cation capacity is expandable to approx. 7.5 bcm/y, which, depending on the market demand, could be made available before The expansion of the terminal will make it possible to provide access to the global market to gas customers located in Poland and in other countries of Central and Eastern Europe. In addition to the construction of interconnections, the Development Plan for also includes a number of measures related to the expansion and modernisation of the national transmission network, which should provide the ability to transmit gas to customers. Furthermore, because of the seasonality which appears in the demand for gas, as well as the limited fl exibility of import contracts, the construction of interconnections and the internal network should also be supported by the construction of new storage facilities interoperating with the transmission system. GAZ-SYSTEM S.A. is currently working on the assessment of the possibilities and conditions for the construction of new storage facilities. The investments encompassed by the Development Plan for are appropriate to the concept of the North-South Corridor, which is the most important investment programme supported by the European Union in Central and Eastern Europe. Its implementation will be supported by the process of creating a single gas market assuring security of gas supplies to the countries in the region. MOP 8.4 MPa gas pipelines Figure 8. Course of the North-South Corridor in Poland WESTERN LINE OF THE NORTH - SOUTH CORRIDOR IN POLAND EASTERN LINE OF THE NORTH - SOUTH CORRIDOR IN POLAND PROJECTS WITH THE PCI STATUS Two lines of the North-South Corridor have been defi ned in Poland: western and eastern. Some of the investments included in this investment programme located in the North-Western Poland and are already being implemented by GAZ-SYSTEM S.A. They are planned for completion by the end of

12 6. EPANSION OF THE TRANSMISSION SYSTEM Investments continued in GAS-SYSTEM S.A. will complete the construction of 878 km of new transmission pipelines by The most important of these are located in North-Western and Central Poland, and are related with natural gas deliveries from the LNG Terminal in Świnoujście. These will be the following pipelines: Szczecin Świnoujście DN 800 gas pipeline Szczecin Lwówek DN 700 gas pipeline Szczecin Gdańsk DN 700 gas pipeline Rembelszczyzna Gustorzyn DN 700 gas pipeline Gustorzyn Odolanów DN 700 gas pipeline The gas pipelines which are being built will constitute the first part of the new transmission system adapted to a maximum operating pressure (MOP) of 8.4 MPa (the so-called northern ring ). The LNG Terminal in Świnoujście is a strategic investment project implemented by the GAZ-SYSTEM subsidiary, Polskie LNG. In the first stage of operation, the LNG terminal will enable the receipt of 5 bcm of natural gas per year. In the next stage, depending on the increase in the demand for gas, it will be possible to extend the re-gasification capacity to 7.5 bcm, without the need to enlarge the site where the terminal is located. The planned parameters are currently: Single unloading platform dock enabling the receipt of vessels of a capacity of 120,000 to 216,000 m3 of LNG; Two tanks, each of a capacity of 160,000 m3 LNG; Re-gasification capacity of 5 bcm of natural gas per year. In addition to providing a new direction of deliveries to Poland, in the future, the LNG terminal may also be a potential source of supply to Central Europe, as well as Lithuania and the other Baltic States. The terminal s capacity is already partly reserved for the implementation of a long-term contract for the import of LNG signed by one of the market participants. The capacity is offered on market terms, taking into account the principles of non-discriminatory third party access to the infrastructure. The terminal will offer the following services: unloading LNG from the tanker, process storage of the unloaded quantities of LNG in the terminal s tanks, re-gasification of LNG, delivery of the natural gas to the entry point the entry into the transmission system, transhipment onto tanker trucks of a capacity of 95,000 tonnes per year. 12

13 Investments planned for After the ongoing investments are completed in 2014, it will be necessary to continue to construct the next sections of the North-South Corridor. The implementation of the investment programme up to 2018 will enable large amounts of gas to be sent from the LNG Terminal to the south and east of Poland and to distribute gas imported from the Czech and Slovak direction through the transmission system. In addition, investments are expected which will increase system capacity in the region of the Łódź and Warsaw agglomerations, as well as Lower Silesia Voivoidship. Further expansion of the system of gas pipelines must be supported by the construction of new compressor stations or the expansion of existing compressor stations. The construction of new compressor stations in Jeleniów and Odolanów, as well as the expansion of a compressor station in Rembelszczyzna are expected. Warsza After 2018, modernisation tasks are planned on the Rembelszczyzna Wronów Rozwadów Jarosław Hermanowice trunk line (Eastern line of the North - South corridor in Poland), together with the continuation of the Western line of the North - South Corridor, arising from market needs and the expected technical condition. The construction of these gas pipelines will also enable the closure of the south-eastern ring of transmission trunk lines and will improve the conditions effective operation of the network. MOP 8.4 MPa gas pipelines Figure 9. Investments continued and planned up to UGS Brzeźnica 65/100 mcm UGS Swarzów 90 mcm 27 UGS Husów 350/500 mcm UGS Strachocina 330 mcm Włocławek Lwówek Grodzisk 23 Odolanów Lasów E GAS SYSTEM Lw GAS SYSTEM WESTERN LINE OF THE NORTH - SOUTH CORRIDO SYSTEM OF TRANSIT GAS PIPELINES INVESTMENTS UP TO 2014 ( ) EASTERN LINE OF THE NORTH - SOUTH CORRIDO PROJECTS WITH TH INVESTMENTS UP TO 2018 ( ) INVESTMENTS UP TO 2023 ( ) 13

14 Table 3. Overview of the most important investments in the transmission system Project Diameter mm Length km INVESTMENTS UP TO Świnoujście - Szczecin Szczecin Gdańsk Szczecin Lwówek ,3 4 Gustorzyn Odolanów ,7 5 Rembelszczyzna Gustorzyn Hermanowice node 7 Gustorzyn node 8 Rembelszczyzna node INVESTMENTS UP TO ,9 9 Polkowice - Żary ,7 10 Lasów Jeleniów ,5 11 Gałów Kiełczów ,7 12 Czeszów Wierzchowice Czeszów Kiełczów Zdzieszowice Wrocław Zdzieszowice Kędzierzyn Poland Czech Republic* Tworóg Kędzierzyn Tworzeń Tworóg Lwówek Odolanów Hermanowice Strachocina Mory Piotrków Tryb. at the section from Wolbórz to Piotrków Tryb Rembelszczyzna - Mory Wronów- Kozienice Mory node 25 Tworzeń node 26 Wygoda node 27 Jeleniów node 28 Jeleniów II compressor station 29 Rembelszczyzna compressor station 30 Kędzierzyn compressor station 31 Odolanów compressor station INVESTMENTS UP TO Pogórska Wola Tworzeń Strachocina Pogórska Wola* Poland - Slovakia* Leśniewice Łódź Mory Wola Karczewska Rembelszczyzna Wronów* Rozwadów Końskowola Wronów* Jarosław Rozwadów* Hermanowice Jarosław Poland - Lithuania Goleniów - Płoty Goleniów compressor station 44 Strachocina compressor station *the diameter is still the subject of additional analyses 14

15 7. RESULTS OF THE IMPLEMENTATION OF THE DEVELOPMENT Diversification and security of supply The implementation of the investment programme contained in the agreed Development Plan for will enable the assurance of a high level of diversification of sources and directions of gas transmission. The national transmission system will have a large capacity and, because of the construction of interconnections, access will be provided to stable and competitive sources of gas supply. This will give the ability to connect new, large customers to the system and will create new business perspectives for enterprises. The Polish network of gas pipelines will become an integral part of the European transmission infrastructure. Chart 3. Change in the structure and planned levels of technical import capabilities Key: Eastwards Poland - Czech Rep. I (Cieszyn) LNG Poland Slovakia Lasów Mallnow Poland Czech Rep. II (Hat) The internal expansion of the system will enable the transmission of imported gas to customers located throughout the country, but it will also mean that interoperation with underground gas storages will be possible. As a result, it will be possible to store imported gas purchased at competitive prices from the terminal in the summer season, whereas it will be possible to withdraw this gas to cover shortfalls in deliveries in the winter season. The continuation and development of the investment programme for the transmission system up to 2023 will be necessary to satisfy the needs of consumers, including households, as well as consumers providing basic public services (including power generation companies, which generate electricity and heat for the inhabitants of many towns in Poland). 15

16 From the point of view of regional development, the benefi ts arising from the implementation of the investments up to 2023 will include: benefi ts for local authority units, in the areas of which the investments are implemented, arising from taxes; an increase in the level of innovativeness of the economy in the regions through access to highly developed technologies using natural gas; an increase in access to the gas infrastructure, which will enable the number of investments to be increased, especially in the power generation and heating sector; Physical effects Given the long-term development of the transmission system, it is forecasted that the following infrastructure will be developed by the end of the planning period: approx. 800 km of new gas transmission pipelines up to 2018, approx. 1,210 km of new gas transmission pipelines up to 2023, a new interconnection between the Polish and Czech transmission systems, the connection of the Polish and Slovak transmission systems, the connection of the Polish and Lithuanian transmission systems. Chart 4. Increase in the length of gas transmission pipelines in and DN DN Diameter (mm) DN 800 DN 700 DN Diameter (mm) DN 800 DN 700 DN <DN <DN Length (km) Length (km) 30 A new system of gas transmission trunk pipelines should be built at the end of the planning period, which covers the 25 whole of Poland. This system will ensure that customer 23.7 expectations are satisfi ed for further decades. bcm 20 Figure 10. Expansion of the MOP MPa system in FORECAST OF OPTIMAL DEVELOPMENT VARIANT FORECAST OF MODERATE GROWTH VARIANT FORECAST FROM THE ENERGY POLICY TO MEASURES IMPLEMENTED BY 2014 MEASURES IMPLEMENTED BY 2018 MEASURES IMPLEMENTED BY 2023 MOP 8.4 MPa gas pipelines 16

17 As a result of the implementation of the Development Plan for , it is expected that a fully functional transmission system will be built in Poland, which is integrated with the gas systems of the neighbouring countries, as a consequence of which an appropriate infrastructure base will arise for the long-term development and operation of a competitive gas market in Poland. As the individual measures are completed, the transmission system will be less susceptible to interruptions in supplies from various directions and will be more flexible in its response to changes on the gas market, including with regard to the preferred directions of cross-border trade on the hub-to-hub principle. The development of the infrastructure will have a positive impact on the development of the gas exchange and market mechanisms enabling gas to be obtained on competitive terms. Conditions for achieving development The key conditions contributing to the ability to implement the investment programme will be: the ability to finance the investments in this respect, just as to date, GAZ-SYSTEM S.A. intends to take advantage of funding from transmission fees, bank loans and funding from the EU, in particular from the European Regional Development Fund, as well as the financial support from the Connecting Europe Facility (CEF). Their use will make it possible to achieve the strategic objectives of the national energy policy (energy security, diversifiction) while minimising the charges for users of the transmission system. ability to implement the investments understood as the conditions for conducting the preparatory work, including, in particular, designing and gaining access to land on which the investments are to be located. In this respect, initiatives related to the amendment of the Act on Re-gasification LNG Terminal in Świnoujście ( LNG Terminal Act ) are noteworthy. Without the fast adoption of these regulations, the implementation of the planned measures regarding deadlines and budgets will be subject to a high level of risk. It should be pointed out that the strategic investments currently being implemented in the construction of the LNG terminal and the gas transmission pipelines will largely be implemented as a result of the high level of effectiveness of the provisions of the LNG Terminal Act adopted in The provisions of this Act enable the implementation of the strategic measures in the transmission system at the required times and within the planned budgets, while simultaneously guaranteeing appropriate compensation for the owners of the land which the pipelines cross. 17

18 8. LIST OF SELECTED INVESTMENTS IN THE DEVELOPMENT PLAN Measure Expected period of completion of the investment LOWER SILESIAN VOIVODSHIP Construction of the Polkowice Żary DN 300 gas pipeline on the section from Polkowice to the border of the voivodship, L = 25 km Construction of the Lubiechów-Wałbrzych DN 300 gas pipeline, L = 5 km Construction of the Zdzieszowice-Wrocław DN 1000 gas pipeline on the Brzeg-Kiełczów section, L=37 km Construction of the Lasów Jeleniów DN 700 gas pipeline, L = 17.5 km Construction of the Czeszów Wierzchowice DN 1000 gas pipeline, L = 13 km Construction of the Gałów Kiełczów DN 500 gas pipeline, L = 41.7 km Construction of the Lwówek Odolanów DN 1000 gas pipeline, L = approx. 7 km Construction of DN 100 gas pipeline to Gas station Olszyna Construction of the Czeszów Kiełczów DN 1000 gas pipeline, L = 33 km Stress test of the Dziwiszów Taczalin DN 400 gas pipeline modernization of Gas station Piotrowice and Gas station Paszowice Reconstruction of the Rogoż Cholewkarska DN 150/400 gas pipeline, L = 8 km Construction of the Jeleniów II compressor station Reconstruction of the Dziwiszów node Reconstruction of the Taczalin node Reconstruction of the Szewce node Reconstruction of the Lasów node Construction of the Kiełczów metering station in the direction of Oleśnica Construction of the Czeszów regulation and reduction station Modernization of Gas station Bolesławiec Dobra Modernization of Gas station Nowy Jaworów - Stage I Modernization of Gas station Strzegom, Armii Krajowej Street Modernization of Gas station Kłodzko - Boguszyn Modernization of Gas station Szczytna 2 Modernization of Gas station Pruszowice Modernization of Gas station Środa Śląska - Stage I Modernization of Gas station Niemcza, Chrobrego Street Modernization of Gas station Krzeptów nr Smolec Stage I Modernization of Gas station Przerzeczyn Modernization of Gas station Stanowice Modernization of Gas station Szalejów Reconstruction of Gas station Radziechów Reconstruction of Gas station Jelenia Góra, PCK Street Reconstruction of Gas station Bardo 2 Construction of Gas station Jelenia Góra Sobieskiego Street Construction of the Ubocze emergency system Modernization of Gas station Godzikowice in the municipality of Oława Connection of customers from Bielany Wrocławskie in the municipality of Kobierzyce, to the transmission network Connection of UGS Wierzchowice - pipeline and station Connection of the Cargill (Polska) Sp. z o.o. production plant to the transmission network Connection of the distribution network in the municipality of Strzelin to the transmission network Connection of the Fortum Power Heat & Poland Sp. z o.o. to the transmission network, CCGT 18

19 Measure Gasification of the Rataje (Oleśnica) housing estate, modernization of Gas station Oleśnica Expected period of completion of the investment KUJAWIAN-POMERANIAN VOIVODSHIP Construction of the Gustorzyn - Odolanów DN 700 gas pipeline, stage I Gustorzyn - Turek on the section from Gustorzyn to the border of the voivodship, L = 38 km Construction of the Rembelszczyzna Gustorzyn DN 700 gas pipeline on the section from the border of the voivodship to Gustorzyn, L = 44 km Connection of Polski Koncern Naftowy ORLEN S.A. in Włocławek to the transmission network Connection of EdF CERGIA Toruń to the transmission network Connection of the Bydgoszcz-Łysomice CCGT to the transmission network Connection of Energa power plant to the transmission network LUBELSKIE VOIVODSHIP Construction of the Wronów Rembelszczyzna DN 700 gas pipeline on the section from Wronów to the border of the voivodship, L = 26 km Construction of the Wronów Kozienice DN 500 gas pipeline on the section from Wronów to the border of the voivodship, L = 14 km Construction of Rozwadów Końskowola Wronów DN 1000 gas pipeline on the section from the border of the voivodship to the Wronów node, L = 103 km (the diameter has yet to be determined in the course of the analyses conducted) Modernization of the Wronów compressor station Reconstruction of the Felin node Modernization of the Wronów node Reconstruction of Gas station Płonki Reconstruction of Gas station Nałęczów Connection of the distribution network in the municipalities of Annopol and Gościeradów to the transmission network LUBUSKIE VOIVODSHIP Construction of the Polkowice Żary DN 300 gas pipeline on the section from the border of the voivodship to Żary, L = 38.7 km Construction of the Szczecin - Lwówek DN 700 gas pipeline, stage I Szczecin Gorzów Wlkp. on the section from the border of the voivodship to Gorzów, L = 12 km Construction of the Szczecin Lwówek DN 700 gas pipeline, stage II Gorzów Wlkp. Lwówek on the section from Gorzów to the border of the Wielkopolskie voivodship, L = 58.3 km Reconstruction of Gas station Szprotawa Żagańska Modernization of Gas station Przytoczna Modernization of Gas station Sulechów Connection of Media Odra Warta Sp. z o.o. metering station in Brzozowiec to the transmission network Connection of the distribution network on the territory of the city and municipality of Zielona Góra in Kisielin to the transmission network Connection of the Gorzów Cogeneration Station to the transmission network ŁÓDZKIE VOIVODSHIP Construction of the DN 400 Mory - Piotrków Tryb. gas pipeline on the Wolbórz- Piotrków Tryb. section, L = 6 km Construction of Rozwadów Końskowola Wronów DN 700 gas pipeline on the section from the border of the voivodship to the Wronów node, L = 58 km (the diameter has yet to be determined in the course of the analyses conducted) Construction of the Meszcze metering station Reconstruction of Gas station Konopnica Reconstruction of Gas station Łęczyca 19

20 Measure Connection of the distribution network within the towns and municipalities of the Skierniewice and Łowicz municipalities (Gas station Chszczonowice) Expected period of completion of the investment LESSER POLAND VOIVODSHIP Construction of the Pogórska Wola - Tworzeń DN 700 gas pipeline on the section from Pogórska Wola to the border of the Świętokrzyskie voivodship from the border of the Świętokrzyskie voivodship to the border of the Śląskie Voivodship, L = 102 km Construction of the Strachocina Pogórska Wola DN 700 gas pipeline on the section from the border of the Małopolskie voivodship to Pogórska Wola, L = 5 km Construction of the Tworzeń Oświęcim DN 700 gas pipeline on the section from the border of the voivodship to Oświęcim, L = 11 km Construction of the Tarnów Zach. Łukanowice Śledziejowice DN 250 gas pipeline with branches to the gas stations, L = 62 km (the diameter has yet to be specified in the course of the analyses conducted) Reconstruction of the DN 150 connecting gas pipeline to Gas station Oświęcim Nowa, L = 1.3 km Reconstruction of the DN 100 Gas station Spytkowice, L = 0.5 km Construction of the Brzeszcz Komorowice DN 300 gas pipeline on the section from Brzeszcz to the border of the voivodship, L = 8 km Construction of the Sędziszów Tarnów DN 400 gas pipeline construction of the Wisłok river crossing using the directional drilling method, L = 0.3 km, Construction of the Łukanowice - Tworzeń DN 500 gas pipeline - construction of a new crossing of the River Vistula at Przewóz, Modernization of the Podgórska Wola compressor station Reconstruction of the Łukanowice node Modernization of the Podgórska Wola node Construction of the Batowice metering station in the direction of Miechów Construction of the Czechówka metering station in the direction of Zakopane Modernization of Gas station Borzęcin Modernization of Gas station Zbylitowska Góra Modernization of Gas station Świątniki Górne Modernization of Gas station Węgrzce Wielkie Modernization of Gas station Spytkowice MASOVIAN VOIVODSHIP Construction of the Rembelszczyzna Gustorzyn DN 700 gas pipeline on the section from Rembelszczyzna to the border of the voivodship, L = 132 km Construction of the Wronów Rembelszczyzna DN 700 gas pipeline on the section from the border of the voivodship to Rembelszczyzna, L = 109 km Construction of the Poland Lithuania DN 700 gas pipeline on the section from Rembelszczyzna to the border of the voivodship, L = 114 km Construction of the Wronów Kozienice DN 500 gas pipeline on the section from the border of the voivodship to Kozienice, L = 16 km Construction of Leśniewice Łódź DN 700 gas pipeline on the section from Leśniewice to the border of the voivodship, L = 8 km (the diameter has yet to be determined in the course of the analyses conducted) Construction of the Rembelszczyzna Mory DN 700 gas pipeline, L = 28 km Construction of Mory Wola Karczewska DN 700 gas pipeline, L = 82 km (91 km with a branch to Sękocin) Modernization of the Rembelszczyzna Wronów DN 500 gas pipeline - installation of sluices and preparation for the pipeline pigging Modernization of metering station Sękocin Expansion of the Rembelszczyzna compressor station 20

21 Modernization of the Mory node Expansion of the Rembelszczyzna node Reconstruction of the Bońki station Measure Modernization of the Mory metering station Reconstruction of Gas station Wola Karczewska Modernization of Gas station Uniszki Zawadzkie Reconstruction of Gas station Grabie Stare Connection of the network in Chszczonowice Connection of equipment and installations of GDF SUEZ Energia Polska S.A. in Płock Connection of the distribution network in the municipality of Radzymin, Dąbrówka, Zabrodzie, in the town of Wólka Radzymińska Connection of the equipment and installations of CLEVEREN HOLDING Mory - Ursus Connection of equipment and installations of PGNiG Termika - EC Żerań Connection of the distribution network in the municipality of Warsaw, the municipality of Jabłonna and the municipality of Legionowo. Construction of SP Jabłonna Connection of the distribution network in the towns and municipalities of Sokołów Podlaski, Węgrów (Proszew) Connection of the distribution network in the municipality of Michałowice, Pruszków Connection of the distribution network in the municipality of Stanisławów, the town and municipality of Mińsk Mazowiecki in Rojków Connection of the distribution network in the municipality of Ząbki, Zielonka, Marki, Warsaw Praga Południe, Warsaw Rembertów Connection of the distribution network in Sękocin to the transmission network Construction of a laboratory for calibrating gas meters at operating pressure in Hołowczyce Expected period of completion of the investment OPOLSKIE VOIVODSHIP Construction of the Zdzieszowice Wrocław DN 1000 gas pipeline on the section from the border of the voivodship to Brzeg, L = 11 km Construction of the Zdzieszowice-Wroclaw DN 1000 gas pipeline with a branch to the town of Przywory in Kąty Opolskie Construction of the Tworóg Kędzierzyn DN 1000 gas pipeline from the border of the voivodship to Kędzierzyn, L = 15 km Construction of the Zdzieszowice Kędzierzyn DN 1000 gas pipeline, L = 19 km Construction of the Kędzierzyn Polish border DN 1000 gas pipeline (connection between Poland and the Czech Republic), L = 50 km (the diameter has yet to be determined in the course of the analyses conducted) Modernization of the Szobiszowice Blachownia gas pipeline, branch to Gas station Kędzierzyn Koźle, Piastów housing estate. Reconstruction of the Zdzieszowice-Wrocław gas pipeline, branch to Gas station Opole Zachód Reconstruction of the DN 200/DN 250 Lewin Brzeski - Nysa gas pipeline Reconstruction of the Brzeg Nysa DN 300 gas pipeline, L = 38 km Reconstruction of Gas station Nysa, ul. Piłsudskiego Modernization of Gas station Głogówek Modernization of Gas station Skoroszyce Connection of the distribution network in the town Nysa to the transmission network. Connection of the distribution network in Krapkowice to the transmission network Connection of the distribution network in the district of Blachownia in Kędzierzyn Koźle to the transmission network 21